Note that I don't have a lot of time to troubleshoot but will answer questions as I get time. If this looks too complicated it probably is ;-)

Put the firmware on the USB Stick

1. Download the beta from the link provided
2. Create a folder named Kobo on the USB key
3. Copy the downloaded firmware file to the Kobo folder on the USB stick
4. Safetly Eject the drive

Boot Ubuntu from the USB stick

1. Insert the USB stick in the laptop
2. restart the laptop
3. If it does not prompt to start Ubuntu you will need to look in the BIOS for boot order options (with the USB stick plugged in)
4. Select Default from the Unetbootin menu

Format the SD Card

1. Insert the SD Card
2. Wait for the Folder to open
3. Close the folder
4. Right Click on the SD Card Icon on the desktop
5. Click Unmount
6. Select System
7. Select Administration
8. Select Disk Utility
9. Locate the SD Card (It should say Secure Digital Drive and the size)
10. Make sure it is the correct drive as you will format it.
11. Click the Format Drive button
12. Accept the master Boot Record and Click Format
13. Click Format if you are sure
14. Click the Create Partition (Green Plus Sign)
15. Select Ext3 as the Type
16. Accept the rest of the defaults and click Create
17. Wait for the spinning wheel to stop
18. Close the Disk Utility
19. Remove the SD card (it was safely unmounted earlier)

Transfer the Firmware to the SD Card

1. Insert the SD Card
2. Hover you mouse over the SD Card in Places (The file Browser that opened)
3. Note the name of the directory (/media/New Volume in my case)
4. Click Applications
5. Click Accessories
6. Click Terminal
7. type: cd /media/New\ Volume
8. Note the \ above was required because of the space in the name)
9. type: sudo tar xvzf /cdrom/Kobo/kobo-1.8-full-dec6-11am.tgz
10. If the folder is still open you will see files getting created
11. type: exit
12. Unmount the SD Card by right clicking on the icon and selecting unmount

The Kobo firmware can be updated by holding down "menu" and pressing power, keeping on holding "menu" until it displays a message saying it's "initializing USB firmware partition". At this point you can plug it in to a PC, copy the firmware to the FAT32 USB mass storage disk it exposes, then eject and unplug the Kobo. It'll reflash its self using the firmware file on the partition. This is the method used by Kobo Desktop to update the Kobo.